So, with the caveat that none of the experts I’ve spoken with have any insider knowledge about the specifics of the deal, here are some of the questions that have emerged.

Why the deal doesn’t make sense

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James Stevenson is a coal analyst for IHS, focusing on North American coal. He called the deal “absolutely fishy.”

Appalachian coal is expensive

Stevenson says he’s not sure why the Abhijeet Group would look towards Appalachian coal supplies to fill the void in India. There are much closer places to get coal, like South Africa, Indonesia and Australia. Appalachian coal is higher quality—it has a higher BTU—but it’s costly to mine thanks to the topography of eastern Kentucky and West Virginia.

But this means it’s the most expensive coal you can buy. Central Appalachian coal is currently selling at about $60 a ton, compared to about $47 a ton for coal from the Illinois Basin. And that’s before you add on transportation costs.

“My outlook is that the Appalachian Basin becomes a mostly metallurgical coal-producing basin,” Stevenson said. Most of America’s metallurgical coal reserves are in West Virginia, and met coal has already been in demand in India for industrial uses, like steel-making. But this new deal is for both metallurgical coal and thermal coal, which is used for electricity.

Stevenson says even if Abhijeet can’t get necessary quantities of thermal coal from countries that are geographically closer to India, a logical choice is to look to the cheaper coal mined in the Illinois Basin (which includes the Western Kentucky coalfields).

“To be honest with you, I’m astonished that Abhijeet, why they wouldn’t be buying Illinois Basin,” he said. “I’m still puzzled.”

(As an aside, for awhile, Illinois Basin coal wasn’t as in demand in the U.S., because it has higher sulfur content than Appalachian coal, and burns dirtier. But now that most power plants are outfitted with scrubbers, they can burn the cheaper coal with the same sulfur emissions as Appalachian coal.)

How much coal can Appalachian producers export?

The terms of the deal that have been released suggest that Booth Energy will supply up to two million tons of coal a year, and the remaining seven million tons or so will come from other producers. Eastern Kentucky produced 68 million tons of coal in 2010, and most of it was used domestically. West Virginia produced 143 million tons last year, and the industry estimates about 50 million tons were exported overseas.

“I think it’s going to be a really hard task for Booth or River Trading or whoever to source another seven million tons per year,” Stevenson said.

How much profit can Indian electrical utilities make off of this deal?

Another valid point that Stevenson makes is that electricity in India is tariff-based. Utilities get a fixed price on producing electricity, but the expense of buying and burning coal fluctuates with the market. So, unless there are significant subsidies involved (which there may be—the Indian government probably doesn’t want another blackout like the one the country experienced at the end of July), the economics of buying expensive coal for Indian electricity don’t really work out.

Why the deal DOES make sense

India needs coal…

John Morgan is the president of Morgan Worldwide, a mine consulting firm that’s based in Lexington. He says he was surprised by the twenty-five year term of the deal, but he wasn’t surprised by the deal itself.

Morgan says India is growing at such a rate that its own coal reserves can’t keep up.

“I’ve seen that India has been looking for greater imports of thermal coal, both for industrial and power generation because Coal India has been unable to supply the requirements of the industry,” he said. “Therefore, India has been importing coal from Indonesia and South Africa and is continuing to look at other sources of coal for its industrial requirements.”

…and Appalachian coal is high quality

Morgan points out that the high-value of Appalachian coal also means that it’s a bigger BTU bang for each buck.

He estimates Appalachian coal is only 10 to 12 percent ash. So if you’re going to take the trouble to load coal onto a barge and ship it thousands of miles, you might as well get the highest quality coal possible.

“[Appalachian coal] is higher quality than Illinois basin because of the sulfur content, and higher quality than the Powder River Basin,” Morgan said. “Because PRB coal is sub-bituminous, and therefore has a lower calorific value, or heat content.”

Maybe there’s significant wiggle-room

James Stevenson of IHS points out that there may be significant optionality in the deal. This means that Abhijeet can choose how much Appalachian coal they can take, and when they want it. So, they can wait until the price works for them, and then order the coal.

Or maybe Abhijeet is betting on cheap Appalachian coal.

This is another option. Everyone I’ve talked to says the price of coal included in the deal will likely fluctuate based on the market price. But Abhijeet may have locked in a slightly below-market rate, and is betting on coal prices rising everywhere else in the world, while Appalachian prices fall. Obviously, this scenario isn’t a good prediction for Appalachia’s economy. Stevenson says his outlook has Appalachian coal sitting at the cost of production—plus a dollar or two—for the next several decades.

It stands to reason that the deal makes sense financially for all the parties involved, or else they wouldn’t have agreed to it. But right now there are a lot of missing details and unanswered questions. Some of them might not be resolved for several years, when there’s a clearer picture of the future of the Appalachian coal industry, exports and the global demand for coal.